LCL Realty: Another 8.3 Million Underwater Homeowners on Track to Resurface Before 2015

While 10.7 million residential homeowners nationwide owe at least 25 percent or more on their mortgages than their properties are worth, another 8.3 million homeowners are either slightly underwater or slightly above water, putting them on track to have enough equity to sell sometime in the next 15 months--without resorting to a short sale.

The 8.3 million include homeowners with a loan to value (LTV) ratio from 90-110 percent, meaning they have between 10 percent positive equity and 10 percent negative equity. These homeowners represented 18 percent or all U.S. homeowners with a mortgaged as of the beginning of September.

The 10.7 million residential properties with an LTV ratio of at least 125 percent represented 23 percent of U.S. residential properties with a mortgage--down from 11.3 million deeply underwater properties representing 26 percent of all residential properties with a mortgage in May 2013 and down from 12.5 million deeply underwater properties representing 28 percent of all residential properties with a mortgage in September 2012.

"Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months," saying Daren Blomquist, vice president at Reality Trac. "Homeowners who already  have ample equity are quickly building on that equity, while the 8.3 million homeowners on the fence with little or no equity are on track to regain enough equity to sell before 2015 if home prices continue to increase at the rate or 1.33 percent per month that they have since bottoming out in March 2012."

Why Sight Unseen is Trending in Today's Market

The lack of available homes for sale is creating a tough market, and in some cases home buyers are making offers on homes they haven't even seen!

In Short:

• Buying homes sight unseen is a small but growing trend in some areas,even in the rental market. This is brought on by the advanced technology and competative market.

• Buyers might make offers without seeing a house for several reasons: They live elsewhere or  for business and even for personal reasons. The buyers may have had scheduling conflicts and couldn’t visit before bids were due or they’re investors are use to buying just based on the characteristics of the property.

• Even though some buyers are making offers without seeing the properties, they’re not going in blind. With the extensive photos and video tours, plenty of websites offer the buyers opportunities to learn about the neighborhoods, schools and research all comparable sales.

•  Those who bid sight unseen have the chance to tour the house during escrow and can still cancel the deal. Courthouse auctions that are in the final stage of the foreclosure process do not offer a chance to see properties in advance, nor is there an inspection period.
  

  
  

Rental and Sale Markets Rise Together

As you may all be aware, the sale and apartment markets normally compete with each other. The calculations are rather simple; if the amount of people who own homes goes up, then the amount of people who rent goes down. However, according to the economists the demand for rentals and housing sales are increasing at the same time.

Why you may wonder? Well, the number of households are growing again after years of being behind the population growth. For many years, college graduates have been moving back home or sharing a house with roommates. Now, these college graduates are starting to strike out on their own which creates a huge demand for new housing sales and rentals.

Since the housing inventory has been desperately trying to catch up to the growth in population for years; both rental and for-sale homes are in short supply. With the huge demand of housing, construction jobs should increase which would also create more jobs and household demands.

The sale market is recovering faster than what we saw last year. Prices rose more than 7 percent despite the small number of houses on the market. Low home prices and interest rates also turned the cost of owning a home into a great deal compared to the increase of costs renting a home or apartment.

At the current level of supply, renters who are trying to buy a home are having difficulties. Even though the real estate recovery is just starting to spread the number of homes that are available are the lowest since 1999, which was the year of the Internet boom. For years, we have heard about the flood of homes which is currently totally 3.4 million--but are still in foreclosure or seriously late in payments. However, banks cannot flood the housing market by trying to sell the homes all at once, even if they wanted to. "A majority of the homes are tied up in the foreclosure processes," according to Freddie Mac.